Marrying Debt
Most people get married without having done a forensic financial investigation into their partner’s life. Passion can be distracting. But having hooked up, with or without the paperwork, you’re eventually going to discover just how good or bad your buddy is with money.
I am often surprised at how willing some partners are to accept their meaningful-other’s shortfalls with statements like, “Oh, yes, (s)he has a ton of debt, but I’m willing to take that on.”
First, let’s clarify some information many people are confused about.
You don’t automatically assume your partner’s level of indebtedness simply because you choose to tie the knot. The only way to be on the hook for your partner’s debt is to actually sign up for it. If you don’t co-sign, co-borrow, or in some way put your John Hancock on the paperwork, nobody can collect the debt from you.
However, if you have joint assets, his or her share of the assets could be affected when the bill collectors want their money back. They can force the sale of joint assets to get their piece of the pie. So the trick would be to not own anything jointly.
And your pal’s crappy credit history could come into play when it comes time to start fulfilling some of your dreams. A lousy history with money may mean your partner becomes dependant on your credit history; you end up doing all the borrowing in your name so you don’t pay exorbitant rates. Now you’re on the hook.
Okay, so that takes care of the liability issues. On to the repayment issues.
Over and over I meet people who having blithely accepted their partner’s failings with money and jumped into the relationship, are filled with seething resentment at all the compromises they have to make because of the debt. There are the vacations that can’t be taken, the house that can’t be bought, the dinners out that they must forgo. It can be wearing after a while. And if the in-debt partner just so happens to earn less than the out-of-debt partner, watch out!
While you did choose each other for better or worse, that usually refers to your circumstances and not your personality make-up. And if you love your partner enough to marry him or her regardless of the debt, then shouldn’t your partner love you enough to want to do everything humanly possible to get rid of that debt?
Don’t whine about how hard it will be, how many extra hours you’ll have to work, how long it will take. Whining is a waste of time. Just make a plan and buckle down to the task at hand.
Sell one car to pay off some of the debt and use the other (if there is another) for everything else. Or trade down.
Rent instead of buying. Yes, I know the one about renting being a waste of money, or a mortgage payment being the same amount as rent, but it isn’t true. When you factor in the property taxes, increased utilities, maintenance, insurance, and all the stuff you house-proudies are going to spend on stuff, renting until the debt is gone makes sense. Besides, nobody said that if you have debt you can afford to rent an expensive place. Rent cheap.
Buy everything second hand until the debt is gone. Ewwwww! Okay, you can buy your undies new if they’re on sale. But that’s it.
The person with the debt must work over-time or part-time on the side to earn extra money to get that debt paid off as fast as possible. This shows the not-in-debt partner that their lover is committed to making things better. It’s like penance. If a partner isn’t willing to do this, they’re not a good partner to have.
Don’t buy anything you don’t NEED. No CDs, DVDs, clothes, electronic toys… nothing that you don’t absotively posolutely need to keep body and soul together.
If you get an income tax refund use it to pay the debt.
Don’t stop saving money. Just because you’re on a debt repayment binge doesn’t mean you don’t need to be stashing away your 10% for long-term savings and some money for your emergency fund.
Try living on one income and using the other for debt repayment. If you’re eventually planning to save for a home and/or have a family, this will be good practice for the future.
But Gail, that sounds like a crappy life. Yup, it can be, if you let it. But if your relationship isn’t strong enough to live through the debt repayment, then you shouldn’t be hooking up at all. This may be hard, but it won’t be the hardest thing you have to do as a couple. And you get to show each other just how committed you are to making a life together. No guts, no glory!